Tuesday, July 28, 2009

Next public action of the No Layoffs Campaign

Reinstate laid-off employees!

Harvard University recently announced 275 layoffs of clerical and administrative staff. Activists estimate that about 1,000 workers have actually lost their jobs at Harvard in the past few months, including contact, less-than-half-time, and term employees, who were not mentioned in Harvard's announcement. These deep cuts will inflict serious harm on workers, their families, the surrounding communities, and scholarship at Harvard. A coalition of union members, non-union workers, students, faculty and neighborhood activists is fighting to stop the layoffs and get workers who have lost their jobs rehired. Please join us:

Thursday, August 6, 12:30 p.m.
Holyoke Center, 1350 Mass. Ave., Cambridge

We will demonstrate to show Harvard that this issue is not going away. The richest university in the world, whose "non-profit" status confers special tax advantages, owes the public more than mass job cuts at a time of economic recession. Harvard made some risky bets on private equity, hedge funds, etc., and has lost some value from its still-massive endowment, but retains enormous resources, and income from many other sources apart from the endowment. If any cuts need to happen, Harvard should "chop at the top," not take away the livelihoods of lower-paid staff, many of whom live check-to-check.

For more information please email: nolayoffscampaign@yahoo.com.

Main Article about Layoffs from Harvard Magazine

"Resizing," before "Reshaping"

Looming Layoffs,” July-August 2009
Liquidity and Leverage,” July-August 2009

No weekday hot breakfasts in House dining halls. Continued constraint on faculty appointments (a total of just 15 to 19 junior-faculty searches in 2009-2010, down from as many as several dozen in recent years), and severe limits on visiting faculty, lecturers, and appointments from other Harvard schools: all pointing to more limited course selections. Reduction of junior-varsity baseball, basketball, and hockey to club status. Teaching-fellow and external teaching-assistant “allocations” under “close scrutiny,” to “ensure compliance with new and existing guidelines on section sizes”—presaging larger discussion sections. A previously announced decrease in doctoral-student admissions—adding to pressure on the future supply of teaching fellows. Thermostats lowered in winter and raised in summer. Lessened reliance on consultants, and tighter travel and entertainment budgets.

These are among the measures listed on the Faculty of Arts and Sciences (FAS) cost-saving website, unveiled on May 11 (www.fas.harvard.edu/home/planning). The academic, administrative, and extracurricular changes are merely those expected to be readily apparent come fall. Neither the economies linked to each measure nor the implications for employees are disclosed, but the actions are meant to realize $77 million in annual savings.

Unfortunately, these steps, characterized by FAS dean Michael D. Smith as a “resizing” through “better use of resources and increased efficiencies,” close only one-third of his faculty’s budget gap. In a community meeting on April 14, he disclosed that Harvard’s largest academic unit (the College and Graduate School of Arts and Sciences)—and the one most hard-pressed, in absolute terms, by the sharp decline in the endowment—faces a $220-million shortfall by the 2010-2011 academic year. FAS received $550 million in endowment distributions to fund operations in fiscal year 2008 and $650 million this past year. It had expected $750 million in the year now beginning, and more thereafter—but instead will be reduced to about $600 million now, and still less in fiscal year 2011. (“A New Economic Reality,” May-June, page 48, reported both the Corporation’s decision to reduce distributions from the endowment for the fiscal year begun this July 1 and again for the following year, and the pressure on other revenue sources.)

The $220-million gap is nearly 20 percent of FAS expenditures in the year just ended. Complicating any economies in the roughly $1.1-billion budget for the new fiscal year, perhaps $375 million is for items that cannot or, for reasons of University policy, will not, be cut: financial aid, sponsored research, and debt service. In fact, each of those items is increasing in the new fiscal year. That still leaves FAS to reduce the cost of its core academic activities by nearly 20 percent.

Smith announced at the meeting that he would charter six working groups (their financial goals yet to be disclosed) to produce cost-cutting proposals from now through spring 2010: arts and humanities, science, social science, College life, College academics, and engineering and applied sciences. Their goal, he wrote bluntly in a May 11 letter, is “a reshaping of the FAS in support of our teaching and research mission through a careful consideration of our academic and programmatic priorities.”

What “reshaping” will entail—perhaps closing or consolidating research centers, or retirement incentives for faculty members—is the subject of anxious speculation, even as the first round of efficiency measures is implemented (see “Looming Layoffs,” page 56). At the May 19 faculty meeting, Francke professor of German art and culture Jeffrey F. Hamburger asked what was meant by “structural change,” as a prelude to the working groups’ assignment. “It’s difficult to make constructive suggestions without some kind of meaningful framework,” he said. He wondered whether there were plans to merge or eliminate departments, and if so, to cut faculty or staff.

President Drew Faust said she hoped that where multiple University units addressed an issue—such as healthcare policy—ways might be found for intellectual collaboration and administrative efficiency. Smith said that the faculty had to examine the intellectual areas it most wished to tackle in the future, and to focus on how to pursue them with the available resources.

Pellegrino University Professor Peter Galison, an historian of science, said he could identify only two “ten to the eighth” (i.e., hundred-million-dollar) opportunities for meaningful savings: debt service and buildings, which were already incurred and in place; and the size of the faculty, which has grown by more than 120 positions this decade. In the end, he said, FAS would “have to be a smaller faculty than we are now,” so it made sense to stop talking about that prospect “in code.”

By planning for a 12 percent reduction in FAS’s endowment distribution for fiscal year 2011 (the Corporation has indicated a cut of “at least” 8 percent), Smith has seemingly built in a budget margin. But financial aid may rise further; past decisions have yielded a still-growing faculty and costly new labs; and faculty and nonunion staff are already going without salary increases.

Although attention focuses on FAS, similar issues play out across Harvard: for example, the Radcliffe Institute for Advanced Study, proportionally the most endowment-dependent academic unit, has reduced by 20 percent its number of fellows in the coming year. The same story is unfolding at comparable institutions that grew increasingly reliant on copious funding from their endowments—until last fall.

On April 1, Moody’s Investors Service, the credit-rating agency, issued a report maintaining its Aaa and associated ratings on the University’s debt, while taking into account “the deleterious effects of the global financial crisis and recession” on its finances. Moody’s reviewed Harvard’s remedial actions, observing that in the next few years “the University will face constraints in its capital program while also dealing with a significant reduction in revenues available to support its operations from endowment.” That said, the credit analysts advanced a “stable” outlook, in the context of one large risk: “[T]he University is more exposed than other organizations (outside of higher education)…to rapid and large additional declines in investment markets, given the magnitude of its balance sheet and equity exposures and the high reliance on endowment income over the long term for operations.” (For more perspective, see “Liquidity and Leverage,” page 52.)

Some other universities with diversified, complex portfolios report on their results throughout the year. In documentation for a bond offering this spring, Cornell disclosed that its investments, down 27 percent as of December 31, had depreciated to a 31 percent loss two months later (an estimate that did not include updated, quarterly valuations of private-equity and real-estate investments). In the meantime, it has more than quadrupled relative holdings of cash from the beginning of the year. The University of Virginia Investment Management Company’s March 31 report also indicated a sizable increase in cash, in part to be ready to make mandated future investments in private asset pools.

Both reports suggest what will attract notice when Harvard Management Company reports fiscal year 2009 performance in late summer: how defensive the portfolio has become (insulating against current losses, but depressing potential returns), and what results large holdings of illiquid and hard-to-value assets have produced.

In the meantime, Princeton president Shirley M. Tilghman on April 6 notified her community that the financial markets had “unhappily” not improved from the beginning of the year, compelling a further round of budget cuts for fiscal years 2010 and 2011—following similar rounds of deeper cuts announced by Yale and Stanford. Tilghman forecast uncomfortable pressure on endowment spending extending beyond 2011, even as Princeton pursues its capital campaign, and concluded, “The steady growth in both faculty and staff that we have enjoyed over the last 10 years will end, and the university will have to contract in size.”

The same is likely for much of Harvard. At the May 19 meeting, Faust said the community faces “very hard choices” and acknowledged, “We have to give some things up.” She urged the faculty to “focus not on what we have lost but on what we still have”—superb libraries, laboratories, students, and professorial colleagues.

For Smith, the immediate problem remains: FAS’s large financial chasm could not be closed in one year, so his working groups face months of effort to find additional cuts. In the future, he said on April 14, “it is increasingly likely…that we will not have a need for as many faculty and staff” as today. How the College and graduate school are reshaped looms as a particularly daunting set of issues for Harvard.

Monday, July 27, 2009

Article from Harvard Magazine about layoffs

Looming Layoffs

Main Article: "Resizing," before "Reshaping",” July-August 2009

Harvard has begun downsizing its workforce. On May 11, Marilyn Hausammann, vice president for human resources, announced that 534 of 1,628 staff members eligible for an early-retirement incentive—33 percent—had accepted the offer. (The Faculty of Arts and Sciences alone offered early retirement to 521 staff members, of whom 30 percent accepted—a small fraction of its nearly 3,700-person staff.)

The retirements will lessen, but not eliminate, layoffs, given pressure to cut spending. As of October 2008, Harvard employed about 12,950 full-time-equivalent non-faculty staff members—coincidentally, nearly 500 more than were employed a year earlier, and almost as many as are retiring early. For the year ended June 30, 2008, compensation accounted for 48 percent of University expenses ($1.7 billion). Hausammann noted, “Although Harvard’s schools and departments are now analyzing the impact of the pending retirements on their budgets…for many schools further reductions in force will likely be necessary to meet budget targets….” FAS dean Michael D. Smith’s letter on the same date reiterated an earlier warning. Although the efficiencies outlined on the FAS website were “staffing neutral,” he wrote, “the financial challenge before us makes it increasingly likely that staff reductions will eventually be necessary.”

The Student Labor Action Movement (SLAM), which led the living-wage campaign for lower-paid University employees at the beginning of the decade, re-emerged around the slogan, “Greed is the new Crimson” (a play on Harvard’s environmental theme), and organized rallies against layoffs (see www.hcs.harvard.edu/slam). SLAM leaflets distributed before the May 19 faculty meeting suggested alternatives (graduated pay reductions of 5 percent to 15 percent and reduced pension contributions for employees earning more than $100,000 per year, reduced paid vacation time) and detailed cuts adopted by senior administrators at Brown, Stanford, and other universities.

Layoffs were widely expected to be announced beginning in late June, after the Commencement crowds dispersed. For updates, consult www.harvardmagazine.com.

Tuesday, July 14, 2009

What it's like to be laid-off: email from an HUCTW member

Below are passages from an email sent by a laid-off Harvard employee. HIRES is the online Harvard jobs database. Tasha is Tasha Williams, current President of the Harvard Union of Clerical & Technical Workers.

Checking HIRES almost every day and I can tell you that the few Gr 53 or Gr 54 jobs there are are each at least 2-3 jobs rolled into one. I applied for a position at JFK school and got a message back from their HR to do an "informational" interview." My impression is that they are screening layoffs especially and Tasha indicated at an HUCTW workshop that it was important not to be appear "sad" or unready for work in any way during these info interviews. Incredibly, she also indicated that we should realize that we are in competition with each other for these jobs and to do everything we can think of to give ourselves an advantage. Can you believe that? I'm sure you can... I was at a gathering in Watertown yesterday and overheard someone say that they understood that Harvard had "only laid off non-essential people", i.e. "dead wood." So this is how they are playing it. I am sure they will find some...robots to fill these unreasonable positions in time and for a time but I can tell you this for certain: Harvard will no longer stand for quality...
If I sound bitter, I am not really. I am relieved to be out of there just sorry that things have gone down the way they have at Harvard. I salute you for continuing to fight back. Everyone who was laid off, including me, is reeling from it. It's sugar-coated but it's a bitter, even poisonous, pill in this economy. It feels like a particularly unpleasant divorce ("I just don't love you anymore."). I am trying to pace myself, heal a little over the summer, and brace myself to go back into battle in the fall. Battle being any job at Harvard these days. It's a nasty ugly place to work and I am not sure I do want to work there anymore. That's what I'm trying to work myself up to. Does this mean they've won? I don't think so. I'm a damn good worker. Anyway, stay in touch with me, keep me posted...in August I'm going to bring my daughter home from her UNPAID internship and paid barista & sandwich making job and get her back to college.
Best to you, keep the faith

Friday, July 10, 2009

One Worker's Story

Harvard Takes Advantage of Weak Economy to Lay Off Employees and Restructure

by Sheila Rish (Participant), Jul-10-09

I am employed by Harvard University in their Fine Arts Library as an image cataloguing assistant and on Tuesday June 23, 2009 I and two other people in the image cataloguing unit were laid off. Seven employees were cut from my library, 30 positions from Harvard College Library overall. This was our “contribution” to the 275 job eliminations, plus reductions in hours to approximately forty other positions that Harvard announced in an early morning email to all university staff on June 23.

Harvard has targeted the libraries during the current economic environment as well as other areas of Fine Arts and Sciences and the law and medical schools. There will be a considerable reorganization and reduction of employees with no apparent thought for either the human cost to those people and their families or the cost to the faculty and student community in lost and diminished services. Harvard is treating the current economic crunch as an opportunity to be ruthless. It has chosen to implement drastic changes at warp speed, apparently assuming that the economic climate immunizes it from public censure. I feel at a loss to know what to do either for myself or to help anyone else.

Harvard administration has been beating the budgetary drums since last October, leading up to the prospect of personnel reductions. Many ominous memos have been issued concerning losses to the university’s still enormous endowment. Last February I was offered an early retirement package which I did not accept. I belong to a union called HUCTW (Harvard Union of Clerical and Technical Workers), AFSCME local 3650, with approximately 4800 members. Until last May HUCTW denied that layoffs were pending. It encouraged relevant people to accept the buyout (30% of all eligible staff accepted) and has denied the implicit coercion. In late May HUCTW acknowledged that 1 to 2 percent of our membership would be laid off. Substantial numbers of exempt staff would be laid off as well. Dining hall and custodial staff (not HUCTW) had at this point already been laid off, and further layoffs of these workers are rumored for the near future.

HUCTW has declined to offer any resistance or to organize around the situation in any way. (Our contract has a no-strike clause, but obviously other things could have been done.) It has not joined efforts by the unions of dining service or custodial staff, UNITE-HERE and SEIU, to support their members. It has not opposed layoffs, merely proposed to moderate them (for example, it suggested something called “voluntary layoffs” as an alternative?!) Here is an example of voluntary layoffs: In mid-June, 32 faculty secretaries employed at Harvard Law School were called to a meeting presided over by human resources, a departmental manager and an HUCTW official. They were told that two among them would be laid off but were offered a 24-hour “grace period” during which individuals could volunteer to be laid off, thus sparing their colleagues. This is HUCTW’s version of solidarity.

It operates on a philosophy called “jointness” which stresses a partnership relationship with management and is highly conflict averse. They have tried to minimize publicity so that less affected staff would not realize the extent of what was happening. They have tailored communications to small groups so people in one work area will not know what goes on elsewhere. Information has been largely through employee grapevine. HUCTW officials abruptly scheduled a post-impact bargaining meeting with their members in my library one day before layoffs were implemented. (I learned informally that a similar meeting was called for employees at Radcliffe the same day.) In deference to management’s wishes, they refused during that meeting to tell us who would be cut or when the cuts would be implemented.

Our contract has neither a seniority clause nor job security clause. There is, in the alternative, something called “work security” which involves 60 days notice and a kind of supplemental unemployment insurance in which the laid off worker can receive pay and benefits for a certain length of time if s/he proves to the satisfaction of a management case worker that s/he is aggressively job hunting. Ultimate there is severance, the amount based on the employee's years of service. However if you do find a job within 2 years the severance must be repaid on a prorated basis, making this in effect a partial loan. This system makes a target of older, longer-service employees, and gives the employer considerable leverage over employees it lays off while imposing relatively light financial consequences.

Harvard plans further budget reductions a year from now with probable further staff reductions. Employees thus far spared are afraid for their jobs. It matters deeply -- to those laid off, to those not laid off, to the community in which Harvard is embedded, and most of all to the living community which Harvard comprises -- that Harvard's administration and Harvard’s largest union learn accountability. Harvard must learn that maximizing it’s endowment is not its mission. And HUCTW, paralyzed by fear of damaging its relationship with management, must learn that its true principal is its membership. Both are accountable to every employee for the harm caused by their decisions, and accountable to the scholars and students who rely on the university’s weakened academic resources. They are accountable.

Thursday, July 9, 2009

Article from the Weekly Dig about No Layoffs protest

In a euphemism-filled email, Harvard University President Drew Faust announced last week that previous cost-cutting efforts—including an early-retirement plan accepted by more than 500 staffers—had been insufficient, and the university would eliminate 275 positions across most of its 10 schools.

Heads began rolling that morning at the business and law schools, and in the coming days continued throughout the university. Anton Lipar, a 29-year-old immigrant from Slovakia, got the news last Wednesday, when he was called into a human resources meeting room and told that his position in the Slavic division of Widener Library had been eliminated. Lipar, who was married last October, must now reconsider his ambitions to buy a home and begin a family. "We had plans for the future because she had a good job, I had a good job," he said. "Now, everything is gone."

In a statement, Harvard spokesperson Kevin Galvin reiterated that employee compensation makes up about half the university's budget and that the university tried several other measures to reduce costs prior to the firing blitz. "Unfortunately, we are facing a projected 30-percent decline in our endowment," he added, "and those steps did not generate the savings we needed to achieve in order to avoid the reduction in force that was announced this week."

On Thursday, about 50 staff, faculty, students and community members gathered in Harvard Yard to protest the layoffs at a lunchtime rally attended by representatives from the Harvard Union of Clerical & Technical Workers; the American Federation of State, County and Municipal Employees; the Student Labor Action Movement; the Socialist Alternative; the Allston-Brighton Neighborhood Assembly, and the Service Employees International Union (SEIU).

Sheila Rish, an image-cataloging assistant in the Fine Arts Library, said she was notified that she would not only lose her job, but because she lives in Harvard-affiliated housing, she will lose her home as well. "They said they intend to make sure that Harvard Real Estate is informed of [the layoff]," she told the crowd.

Afsaneh Najmabadi, a professor of women's and gender studies, said some faculty members had advocated for a reverse sliding scale of pay cuts because "people who make more than $250,000 in annual pay, they can afford a 5-, 10-, 15-percent cut ... but unfortunately, none of the suggestions were ever taken up."

Tuesday, July 7, 2009

Vanity Fair article on Harvard's finances

Rich Harvard, Poor Harvard


For years, administrators at Harvard University could throw money at anything that tickled their fancy. A new medical school building for $260 million? Sure. A massive, Robert A.M. Stern—designed addition to Harvard Law School? No problem. One of the most sweeping financial aid initiatives ever undertaken? Consider it done.

Of course, that was before the money dried up.

Now, Vanity Fair’s Nina Munk finds America’s oldest university suddenly at risk of not being able to keep the lights on. Over the past year, Harvard’s endowment has collapsed (it lost $8 billion between last July and October), its fundraising has declined, and its construction cranes have been idled. Gripped by the worst economic crisis in its history, Harvard is in trouble, and no one can decide who’s to blame.

Munk exposes the behind-the-scenes finger-pointing and uncertainty that has administrators longing for the gilded age of soaring endowments. Highlights from the article, “Rich Harvard Poor Harvard,” include:

A lone bright spot
• Harvard’s year-end numbers will not be as bad as predicted, Munk learned from a source on the board of Harvard Management Company, the firm responsible for managing the university’s endowment. Although the university’s endowment has shrunk precipitously over the past year, the insider says it will be down 23 to 25 percent, not the 30 percent predicted elsewhere.

Harvard doesn't fire people; it “resizes”
• Budget cuts are not in the Harvard vocabulary—or at least they haven’t been. “I'd rather use the words ‘reduction,’ ‘shifting things around,’ ‘reorganizing’—rather than saying something that says ‘cuts,’ which implies you whack the heads off flowers,” Evelynn Hammonds, the dean of Harvard College, said at a town-hall meeting in May. But there is a lot of whacking that will have to be done. “There are going to be a hell of a lot of layoffs. Courses will be cut. Class sizes will get bigger,” conceded a Harvard insider.

In the real world, people get fired for mismanagement like this
• The Harvard endowment soared from $4.8 billion in 1990 to $36.9 billion as of June 30, 2008, and in the last half-decade or so, the men and women who run Harvard seemed to have convinced themselves that the university’s fund would grow at double-digit rates for, well, eternity. “Apparently nobody in our financial office has read the story in Genesis about Joseph interpreting Pharaoh’s dream—you know, during the seven good years you save for the seven lean years,” says Alan Dershowitz, a professor at Harvard Law School since 1967.

Harvard is desperate
• If Harvard were a serious business facing a liquidity crisis, it would have made drastic changes as its endowment tanked: say, axing senior employees, shuttering departments, and selling real estate. But elite universities don’t like shaking things up. “None of these schools has the ability to cut expenses fast enough” is how a hedge-fund manager who counts Harvard among his investors describes the situation. Munk asked the hedge fund manager to look at Harvard’s finances and assess the extent to which its endowment will be able to keep pace with its immovable costs. The hedge fund manager’s conclusion: “They are completely fucked.”

• In the fall of 2008, Harvard tried to sell off a $1.5 billion chunk of its private-equity portfolio—except no one was willing to pay anywhere near the asking price for those assets. One money manager described a conversation late last year with Jane Mendillo (who in July 2008 became president and C.E.O. of Harvard Management Company) in which he offered to buy back Harvard’s sizable stake in his private fund.

“Here, I think it’s worth—you know, today the [book] value is a dollar, so I’ll pay you 50 cents,” he said.

“Then why would I sell it?” Mendillo responded.

“Well, why are you?” he said. “I don’t know. You’re the one who wants to sell, not me. If you guys want to sell, I’m happy to rip your lungs out… If you are desperate, I’m a buyer.”

“Well,” Mendillo responded, “we’re not desperate.”

Except it’s pretty clear Harvard was desperate. In December, the university sold $2.5 billion worth of bonds, increasing its total debt to just over $6 billion. Servicing that debt alone will cost Harvard an average of $517 million a year through 2038, according to Standard & Poor’s.

A $1 billion mistake
• Harvard sold those bonds because it needed cash, fast, to cover what sources say was an almost unthinkable $1 billion unrealized loss from interest-rate swaps. The swaps were put in place under former Harvard president Larry Summers in the early 2000s to protect the university against rising interest rates on all the money it had borrowed. Instead, interest rates plunged. Yet for reasons no one can seem to explain, the university simply forgot to (or chose not to) cancel its swaps. The result was a $1 billion loss.

The fall of Harvard Management Company
• The longtime head of Harvard Management Company, Jack Meyer, quit to start his own hedge fund in 2005 after growing fed up with criticism over the eight-figure salaries some of his managers were pulling down and with persistent meddling from top Harvard officials. Two particular annoyances were Summers, who had been questioning Meyer’s investment strategies, and Robert Rubin, a member of the Harvard Corporation, who frowned on Meyer’s aggressive strategies and wound up on the “warpath” with Meyer, as one person put it.

• When Meyer left, he took much of Harvard Management Company with him — including 30 portfolio managers and traders, as well as the chief risk officer, chief operating officer, and chief technology officer. The place became “like a Ferrari without the engine,” according to a portfolio manager who arrived after Meyer left. This angered Rubin, according to someone who knows him well: “In Rubin’s opinion, Meyer crippled the institution.”

Rule one about that “resizing”: Don’t talk about it
• Munk became persona non grata in Cambridge, as Harvard refused to cooperate with her on the story. But speaking on the condition of anonymity, administrators and other officials were happy to snipe back and forth. “Were the judgments we made reasonable ones?” asked a former top Harvard administrator. “At the time, I think they were reasonable judgments. It turns out, with the benefit of hindsight, you might have preferred less ambitious plans.” A member of the board of Harvard Management Company doesn’t buy it. “This story is about leadership. It isn’t about money,” the person said.

Vanity Fair’s August issue, which contains the full text of “Rich Harvard, Poor Harvard,” hits newsstands in New York and Los Angeles on July 1, and nationwide on July 7.

Thursday, July 2, 2009

London Times on Harvard Layoffs

June 28, 2009

What they don’t teach about cash at Harvard

The world’s richest university has seen its investments slump by $11bn

The quiet of Harvard Yard, the centre of Boston’s famous university, was shattered last week by protesters waving placards and wielding megaphones.

Tourists trying to get their photo taken with the statue of founder John Harvard contended with angry university staff railing against proposals to cut 275 jobs. “Watch out, this is just the beginning,” warned Geoff Carens, a library assistant and protest organiser.

As the world’s richest university wrestles with the hangover of a high-risk investment spree that has wiped $11 billion (£6.6 billion) off its fortunes in the past year, more cuts are coming, he said. This is unlikely to be the last time voices are raised. Staff will not go quietly, said Carens. Future protests would involve “direct action” and be “a lot more dramatic”.

The demonstration was the latest embarrassment at Harvard, which is expected to confirm a 30% fall in its endowment for its 2009 financial year, which ends on Tuesday.

Staff expecting more cuts accuse Drew Faust, its president, of being more concerned with investment returns than academic excellence. Others have identified a more incendiary target: Larry Summers, one of President Barack Obama’s top financial advisers, who was Harvard president between 2001 and 2006.

Harvard’s endowment, a collection of funds made up from donations from alumni, funded about a third of Harvard’s operating budget in 2008. This year’s loss is the biggest in 40 years and the impact is being felt across the campus.

Salaries have been frozen, the divinity school has warned it may not be able to cover tuition for all its students and the university has been forced to add to its debt by issuing $1.5 billion in new bonds, its largest such offering – a sharp reversal of fortune for a fund that was once held up as a model of investment strategy.

Harvard’s endowment stood at $37 billion on June 30 last year, built up from a record run after the university’s fund-management arm made big bets on everything from private equity and property to timber and commodities. Now some of those risky bets have come dramatically unstuck.

The endowment is expected to have fallen to almost $25 billion by the end of the month and the always present tensions between the academics and Harvard Management Company (HMC), the subsidiary that invests the university’s money, are at boiling point.

And that is despite a donation of $100m from David Rockerfeller Sr last year, topped by a $125m gift from Hansj√∂rg Wyss, Switzerland’s second-richest man, in October.

“Harvard has become an investment bank with a university attached,” said Carens. “When I came to Harvard the endowment was $4.5 billion. Now by most estimates it is $25 billion. Harvard has lost some money but they don’t need to lay anybody off. If they need to, they should chop at the top. Cut the salaries of the five or six people who manage the Harvard endowment – they get paid between $2m and $6.4m a year.”

In the 15 years before this year’s fall, Harvard returned an annual 15.7% against 9.2% for the Standard & Poor’s index. Until 2005 HMC was presided over for 16 years by investment guru Jack Meyer, but since his exit in 2005 HMC has gone through staff at an alarming rate, including five chiefs in four years. Last week saw the departure of Marc Seidner, head of fixed income.

New boss Jane Mendillo, 50, came to Harvard last July after running Wellesley College’s far smaller endowment. “I think all investors have had a lesson in how fast and how far the markets can move,” she said in a recent interview.

One alumnus, now a senior financial figure, said Mendillo faced a tough task but could not be blamed for the mess. He said that under Summers, now director of the White House’s National Economic Council, Harvard had given big tuition discounts, started an ambitious building programme and failed to spot the long-term risks being taken by HMC.

“They wanted the best students at any cost. They were giving away tuition dollars in the hope of making it up on the endowment. Summers was responsible for that decision. A lot of people are scared stiff that he is going to do for the American economy what he did for Harvard University,” he said.

Others are more generous. Peter Miralles, president of Atlanta Wealth Consultants, said: “What you are seeing is a reaction to a market environment. They were very early in using multiple asset classes, alternative investments, private equity, commodities. But last year you had a total melt-down in almost every asset class.” Inevitably, he said, in this environment donors were less likely to be generous to Harvard, worsening its position.

Over the long term, though, he said HMC had proved a good manager and would be so again. “The big question is, is using multiple asset classes going to work. The answer is yes,” he said.

Harvard was not alone in being caught out by the credit crunch. “The world changed so quickly on September 15 (the day Lehman Brothers filed for bankruptcy), you had to take a lot of actions very quickly,” said one senior fund manager.

What he said was more troubling was Harvard’s reaction to the crisis. “If you looked at the numbers coming out of the endowment world for the fourth quarter of 2008 they all looked the same. Yale, Princeton, Harvard, it didn’t make a difference.” But after the crisis Harvard panicked and starting selling assets. At Yale, Harvard’s arch rival, the “rhetoric was very different”, he said.

The fund manager said David Swensen, Yale’s chief investment officer, had taken a different tack. The fund manager said: “The important thing is to stay in the trade. Those who stayed in caught the bounce, especially in emerging markets. Others like Harvard, I think, started selling like crazy."

Matters were made worse, the fund manager said, by a badly-timed bet on interest rates – which collapsed after Lehman – and the decision to cut risk insurance that had been put in place by Meyer’s successor, Mohamed El-Erian, now co-chief executive of the bond giant Pimco.

Harvard would not comment on investment strategy, but Harvard watchers on Wall Street said El-Erian’s insurance had allowed the endowment to ride out some of the turbulence before Lehman’s collapse. As the crisis worsened, HMC had lost its cushion and its nerve. “If you are down 20% or 30%, the human reaction is to sell when really you should be buying,” said one fund manager.

One of Mendillo’s first moves at HMC was to sell between $1 billion and $1.5 billion of Harvard’s private-equity assets, at a substantial loss. Even after the sale, the endowment still has big private-equity commitments it has yet to pay.

And the people who are paying for the losses are the university staff, said Carens. “These people (at HMC) have made fortunes losing money for the endowment. Now they want us to foot the bill.”

Wednesday, July 1, 2009

More layoffs coming for custodial staff

Cutbacks to Subcontracted Janitorial Staff Continue
Published On Tuesday, June 30, 2009 9:10 PM

University officials are continuing to cut Harvard's subcontracted janitorial staff despite a string of protests in Cambridge and at the Medical School campus this past spring, according to union organizers.

Acme Pioneer Building Services, which provides roughly 40 cleaners at various locations throughout Harvard's Cambridge campus, is planning on laying off the equivalent of four full-time employees at the Harvard Kennedy School, according to Wayne M. Langley, director of higher education for the Service Employees International Union Local 615. Daniel B. Becker, an SEIU organizer working with Langley, said that while the cuts have not been fully finalized, the reductions were slated to happen on July 1 and some workers may have already been notified.

Becker also said that the union learned on Tuesday morning that 10 workers at Harvard Business School, subcontracted from UGL Unicco, are scheduled to be laid off on July 13. He said that the workers were notified of the cuts on Monday, but that the Union had not been consulted beforehand.

Unicco is also planning on laying off one part-time worker at the Radcliffe Institute of Advanced Study while cutting work hours by 8 percent for the other 12 employees there, Becker said. He emphasized that the union is still engaged in discussions with the subcontractor about the downsizing.

University spokesman Kevin Galvin declined to comment on the latest staff reductions. But Harvard officials have long cited the slumping endowment as a reason to trim compensation costs, which make up roughly half of Harvard's operating budget.

Langley said that the University's decentralized decision-making and budget-planning process have made it difficult for the union to gather concrete information about the reductions. He also warned that similar cuts to subcontracted workers will likely continue through the summer and the next fiscal year.

Earlier this spring, a number of subcontracted janitors were laid off at Harvard Medical School and Harvard Real Estate Services, prompting student protests and even a vigil for the workers. American Cleaning Company laid off 11 employees but then rehired two at HMS, and OneSource laid off seven at properties administered by HRES, Langley said. He added that due to a contract swap and reduction, Unicco also lost two employees at HRES.

While the University does not directly dictate how many workers need to be laid off at the various sites, it has asked subcontractors to cut costs by 30 to 40 percent, which have translated into staff reductions. Langley said that he does not know of any reductions made to Harvard's directly-hired cleaning staff.

Langley said he believes that Harvard has failed to provide adequate and detailed financial information to justify the cuts, and that it is debatable whether the janitorial staff reductions are necessary or effective. As such, he said, "we feel Harvard has the resources not to do any layoffs [and] there's been a choice made here, to punish loyal, hardworking employees and to keep the endowment."

Furthermore, he said, when SEIU organizers meet with human resource and academic administrators, Harvard officials are uninformed and fail to communicate openly about their specific cost-cutting needs and goals. He said that the union routinely asks Harvard how many staff will be cut and how the University plans to accomplish the same workload with fewer staff, but each time the response has been unclear and unsatisfactory.

"The University says they're willing to meet at any time, but it's an illusion," he said. "Then they ask, 'What do we mean?' I say, 'They don't answer the questions.' There's been this cone of silence over the whole problem."

John DeLuca, president of Acme Pioneer, declined to comment on the discussions with Harvard. But he emphasized that Acme is a service company dedicated to meeting its customers' needs, and he noted that beyond ensuring that the cuts are made according to seniority, the Union has little real say in the cost-cutting process.

"If Harvard says we're going to cut these services, it's what you do," DeLuca said. "[The union] has nothing to say about the cuts. If you're running a business and you want to cut somebody, you don't have to ask the union's permission. That's the way America runs."

Representatives from Unicco could not be reached for comment on the layoffs.

Langley said he is concerned that there is a "passivity" in the Harvard community about the recent University-wide staff layoffs, as well as the janitorial cuts. But he insisted that "despite what people say, [the cuts] will have an impact on the academic quality of the institution."

"We continue to insist that there's no need for layoffs at this time, and that's our position," he said. "In prior recessions, if you got laid off, you could find a job, although maybe not the best job...[it's] a whole different ball game now. This is like life or death stuff, and I'm being completely honest. We see the consequences of people losing houses and healthcare when they can't find work, and we've seen this in our own union."

—Staff writer Peter F. Zhu can be reached at pzhu@fas.harvard.edu.

Article about Layoffs

Harvard Layoffs: The Axe Falls But Workers Fight Back
Jun 30, 2009
By Joshua Koritz, member Harvard Union of Clerical and Technical Workers/AFSCME 3650 (personal capacity)

On Tuesday, June 23, after months of cuts in budgets throughout the organization, Harvard University announced 275 layoffs. Activists in the Harvard No-Layoffs Campaign quickly called a demonstration and 100 people showed up in Harvard Yard two days later to protest these layoffs.

Workers from the Harvard Union of Clerical and Technical Workers/AFSCME 3650, SEIU 615 (janitors and security guards), UNITE HERE 26 (dining hall workers), students in the Student Labor Action Movement (SLAM), faculty members and concerned community members all made up a spirited demonstration that marched around Harvard Yard during their lunch break. Chanting: “They say cutback, we say fightback!” “They say layoff, we say back off!” “1,2,3,4, Harvard is not poor! 5,6,7,8, layoffs are what we hate!”

Testimonials from workers who had been laid off without even so much as an inkling that their jobs were at risk, from their co-workers, and from faculty and students who will be negatively affected by this reduction in staff made for a powerful kick off.

The No-Layoffs Campaign at Harvard is unique in that it was started up by activists before any layoffs were actually announced, so a small network of activists was already in place to respond. However it will take a massive mobilization of Harvard workers and community in the coming months to prevent further layoffs and get those jobs back that have already been eliminated. This is needed not just at Harvard, but throughout society in all industries and areas that have seen layoffs and cutbacks.

Harvard's Money and the Layoffs
In September, 2008, Harvard made headlines announcing an endowment of $37 billion, making it the richest university in the world and the second richest non-profit, non-government organization in the world. Since then, it is estimated that the endowment has lost 30% of its value. It is worth pointing out that Harvard does not rely solely on its endowment for income, but received over $600 million in gifts in 2008, owns property and collects rent all over the Boston area, plus tuition, federal and private grants, not to mention the retail money Harvard makes from branding.

Harvard has used this drop in the value of its endowment as an excuse to centralize and streamline its administration. This was eventually going to result in layoffs, and in fact these are not the first. Already custodial staff and dining hall staff have had positions eliminated.

These decisions are being made by the reclusive Harvard Corporation, headed by president Drew Gilpin Faust. It is an unelected, secretive board that includes Robert Rubin (former bigwig at CitiGroup) and has cut the flow of funding to Harvard from the endowment. They run the endowment like an investment bank – for profit – yet Harvard is legally a non-profit. If Harvard is not willing to dip into the principle of its endowment in these troubling economic times to save jobs and the greater community of which it is part it should lose its non-profit status and pay taxes like the rest of us on the profits it makes.

The layoffs have been spread throughout the university but have targeted many longer serving workers who, due to union raises, were at the top of their pay scale, some of whom were only a few years from retirement.

Workers at Harvard are being forced to pay the price for the economic recession, a blatant attack on working people by the hedge fund gamblers, like those who have managed the Harvard endowment, who are responsible for this recession.

Each layoff represents rents and bills that may not get paid. Each one represents a parent who agonizes over where their next meal will come from. Each layoff is a slap in the face to workers at Harvard and workers everywhere. When Harvard can lay people off despite their riches, we need to say: if you can't run this, we will! Take Harvard out of the hands of the corporate elite. Open its doors to the community. Use the endowment for education and not for profit